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    • dearbecks
    • By dearbecks 12th Aug 18, 8:21 AM
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    dearbecks
    Drawing a salary from a limited company
    • #1
    • 12th Aug 18, 8:21 AM
    Drawing a salary from a limited company 12th Aug 18 at 8:21 AM
    Hello

    My husband was made redundant several months ago, so has set up a limited company & is doing consultancy work. When drawing a salary do we have to work out & pay tax/nic each month? Or does he need to complete a self assessment at the end of each year? We havenít yet registered for PAYE. Also is he able to claim travel expenses through the business to/from clients? Thank you.
Page 1
    • Pennywise
    • By Pennywise 12th Aug 18, 8:37 AM
    • 10,643 Posts
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    Pennywise
    • #2
    • 12th Aug 18, 8:37 AM
    • #2
    • 12th Aug 18, 8:37 AM
    If he wants to draw a salary then, yes, the company needs to set up a PAYE scheme and calculate/pay tax/nic and make RTI submissions to HMRC for each pay period (week or month). You/he need to take care when deciding how much to pay - many factors determine the optimal amount - a mix of salary and dividends is usually the best solution.

    Yes, if he's personally incurring costs which are wholly, exclusively and necessarily incurred for the business, he can prepare expenses claim forms and reclaim the money from his ltd co, just as he would for a normal employment. You'd need to research the rules about allowability.

    He may also have to complete SA tax returns to declare the wages and dividends. HMRC may ask for it, or if he has a personal tax liability (maybe on dividends), he may have to complete one to advise his liability.

    You may be best to get an accountant on board now to give proper advice in these areas. By the sound of it, you'll need one for the year end accounts/returns anyway, and charges are about the same either way so it's a win-win to have advice to stop mistakes being made and planning opportunities being lost.
    • comeandgo
    • By comeandgo 12th Aug 18, 8:38 AM
    • 2,202 Posts
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    comeandgo
    • #3
    • 12th Aug 18, 8:38 AM
    • #3
    • 12th Aug 18, 8:38 AM
    Your husband is an employee of the ltd company so any wages have to be dealt with as PAYE. What I usually see with dir etors in ltd companies is they take a low wage, less than 10,000 a year and take dividends, this is more tax efficient but get advice from your accountant as it may give problems if you need a mortgage later.
    Travel expenses while on business is acceptable, keep receipts in case HMRC do an audit. Would a company car be better for your husband? Again your accountant will advise.
    • trailingspouse
    • By trailingspouse 13th Aug 18, 1:33 AM
    • 2,915 Posts
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    trailingspouse
    • #4
    • 13th Aug 18, 1:33 AM
    • #4
    • 13th Aug 18, 1:33 AM
    Accountant, accountant, accountant.


    We can all tell you what we do - but that might not be appropriate in your situation. For example, myself and OH are 50:50 directors of our limited company. We both take a small salary, and pay ourselves the bulk of our income in dividends. But if you already have a job and/or have no interest/skills in your husband's industry, that wouldn't work for you.
    • fishybusiness
    • By fishybusiness 13th Aug 18, 2:54 PM
    • 1,231 Posts
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    fishybusiness
    • #5
    • 13th Aug 18, 2:54 PM
    • #5
    • 13th Aug 18, 2:54 PM
    Agree with above - we both take out of our company, but up to lower tax threshold due to our own circumstances.

    Accountant is best placed to advise you.
    • phill99
    • By phill99 13th Aug 18, 6:45 PM
    • 8,224 Posts
    • 7,408 Thanks
    phill99
    • #6
    • 13th Aug 18, 6:45 PM
    • #6
    • 13th Aug 18, 6:45 PM
    Always employ the services of an accountant. It may cost you £500 a year but it will pay for itself over and over again.
    Eat vegetables and fear no creditors, rather than eat duck and hide.
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